What's In A Border? For Some, Very Little

Foreign-owned Subsidiaries Adapt

February 04, 1999|By MATT GLYNN Daily Press

The border between the United States and Canada doesn't mean much to John Dale. From his office near Toronto, he oversees Twinpak Inc. packaging plants in Newport News and Regina, Saskatchewan, that are similar to each other. "We're running a North American business," he said.

Americans run the show at the Peninsula plant, and that's not a big deal to Dale, either. What matters, he said, is that the plant is healthy. It's recently turned into a seven-day-a-week operation and has grown to 70 employees.

The region has attracted its share of companies with local operations accountable to bosses in other countries. Lucas Control Systems in Hampton is a business unit of LucasVarity, based in Great Britain. Canon Virginia Inc. is part of Japanese-based Canon's global reach. Twinpak's case is more complex than most: It's based in Canada but owned by an Australian corporation.

Dale doesn't ignore the difference between the United States and Canada in issues such as health care. When Twinpak was setting up its plant in Newport News, the company hired consultants to talk to other area companies about their benefits packages to ensure that Twinpak would be in step with the area. "We want to be competitive with local market conditions. We consider ourselves a local employer."

Twinpak officials in Canada can keep tabs on the Newport News plant via computers, and Dale visits about every other month. But the plant still takes care of payroll and other daily activities. "The local management has a lot of autonomy."

Cresstale has put Americans in charge of its cosmetic-containers plant in Franklin, its first location outside the United Kingdom. "Thankfully, they are people we have known for several years," said Peter Minto, Cresstale's owner. Headquarters will still have the final say in decisions, and Minto plans to split his time between here and his home country during the Franklin plant's first year.

Lucas Control Systems in Hampton has a British boss, Robert Davies, but there's no dictate from LucasVarity headquarters in the United Kingdom to appoint people of a particular nationality, said Neal Seymour, business counsel in Hampton. The company is more interested in finding people who have the best credentials for leadership positions. "It's a matter of them putting the right people in charge."

Americans work in LucasVarity's management in the United Kingdom. And the company, which has 50,000 employees worldwide, tries to broaden employees' horizons by sending people to other countries to expose them to new environments.

Lucas Control Systems is more than just another dot on the LucasVarity map: The Hampton site is a $500 million "sub-world headquarters." It oversees operations at other locations in the United States, United Kingdom and China, as part of LucasVarity's electrical and electronic systems division.

As president of a business unit, Davies has lots of authority in decisions such as capital equipment and personnel. Large-scale decisions still need the board of directors' say-so, but the organization as a whole has become more decentralized. "In the old days, you used to have to say, `Mother, may I,' " Seymour said.

Over the past year, the region has seen a shakeup in its roster of foreign-owned businesses. Swedish-owned Gambro, which has had a presence in Newport News for 25 years, will close its medical-products plant later this year, part of a broader restructuring. O&K Escalator pulled out of Newport News when its foreign ownership changed hands. The local plant's operations were shipped to Illinois.

Montreal-based St. Laurent Paperboard cut jobs at operations that it recently acquired from Chesapeake Corp., including the West Point paper mill. St. Laurent said the reductions were necessary to reshape the company and keep it competitive, assuring employees that the changes would ultimately help the mill's viability. Questions still remain about Yorktown's future as part of the newly merged BP Amoco. Yorktown was the smallest of Amoco's five U.S. oil refineries.

Canon Virginia Inc., on the other hand, has grown and added subsidiaries since opening here in the mid-1980s. The local managers handle daily operations, provide product feedback and are now involved in some product design, Canon officials said. Still, many of the decisions are made jointly by Canon Inc. in Japan and Canon USA - Canon Virginia's parent company in Lake Success, N.Y.

Although the U.S.-Canadian border might not be of great significance to Twinpak's Dale, Dale said, the company has to be careful to recruit people for senior management jobs who can relate to a foreign owner. It's not uncommon for company officials at some meetings to talk about three kinds of dollars: U.S., Canadian and Australian.

From LucasVarity's viewpoint, getting managers to work in different countries is good for the employees and the company, Seymour said. "They become better people in management, and it doesn't become so parochial."

- Matt Glynn can be reached at 247-4969 or by e-mail at mglynn@dailypress.com